Egyptian prime minister Mostafa Madbouly announced on Wednesday that his government plans to offer stakes in 32 state-owned enterprises from now until the end of the first quarter of 2024.
He told a news conference that they include three banks and two military-owned companies.
The companies will be offered to individual and “strategic” investors, he added.
The companies are 12 more than what Mr Madbouly said last week would be available in initial public offerings.
The banks are Banqu Du Caire, Arab African International Bank and United Bank of Egypt. The two military-owned companies are Safi, which produces bottled mineral water, and Wataniyah, a nationwide chain of petrol stations.
He said the companies cover activity in 18 economic sectors, including energy, transport, electricity and insurance.
IPOs of at least 25 per cent of these companies will be carried out in the next six months, said Mr Madbouly.
Egypt has for years spoken about privatising state-owned companies, but the plan took on added urgency following the outbreak of the Russia-Ukraine war nearly a year ago, which has had a devastating impact on the nation's economy.
The coronavirus pandemic also affected Egypt severely and its economic problems include a foreign currency crunch and double-digit inflation. Its currency has lost about 50 per cent of its value since March last year.
“This is a step that confirms the seriousness of the state in doing what it has pledged to do,” said the prime minister.
“This is a cash flow situation,” Rami El Dokany, chairman of the Egyptian Stock Exchange told The National in an interview earlier this week. “Once the cash flow has been resolved, we’re going to see more interest, and more inflows happening.
“I think the IPO programme will play a big role in making things happen.”
Egypt in December agreed to a $3 billion rescue plan with the International Monetary Fund. The deal is contingent on the country introducing a flexible foreign exchange regime and reducing the state's footprint in the economy to allow more room for the private sector.
Mr Madbouly's announcement came one day after Moody's Investors Service downgraded Egypt's credit rating to B3 from B2, owing to what it called the country's reduced external buffers and shock absorption capacity as it pursues economic reforms and structural changes.
The country's outlook was changed to stable from negative, it said.
The rating downgrade, which takes Egypt deeper into junk territory, takes place as the most populous Arab nation strives to move towards a more export, and private sector-led growth model under a flexible exchange rate regime.
Moody's said the Egyptian government's state-owned asset sale strategy will support its structural adjustment and help generate sustained non-debt creating capital inflows to meet increased external debt service payments over the next two years.
Egypt’s foreign debt is thought to be more than $150 billion, making it one of the most indebted countries in the Middle East.
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Who's who in Yemen conflict
Houthis: Iran-backed rebels who occupy Sanaa and run unrecognised government
Yemeni government: Exiled government in Aden led by eight-member Presidential Leadership Council
Southern Transitional Council: Faction in Yemeni government that seeks autonomy for the south
Habrish 'rebels': Tribal-backed forces feuding with STC over control of oil in government territory
Intercontinental Cup
Namibia v UAE Saturday Sep 16-Tuesday Sep 19
Table 1 Ireland, 89 points; 2 Afghanistan, 81; 3 Netherlands, 52; 4 Papua New Guinea, 40; 5 Hong Kong, 39; 6 Scotland, 37; 7 UAE, 27; 8 Namibia, 27
The major Hashd factions linked to Iran:
Badr Organisation: Seen as the most militarily capable faction in the Hashd. Iraqi Shiite exiles opposed to Saddam Hussein set up the group in Tehran in the early 1980s as the Badr Corps under the supervision of the Iran Revolutionary Guards Corps (IRGC). The militia exalts Iran’s Supreme Leader Ali Khamenei but intermittently cooperated with the US military.
Saraya Al Salam (Peace Brigade): Comprised of former members of the officially defunct Mahdi Army, a militia that was commanded by Iraqi cleric Moqtada Al Sadr and fought US and Iraqi government and other forces between 2004 and 2008. As part of a political overhaul aimed as casting Mr Al Sadr as a more nationalist and less sectarian figure, the cleric formed Saraya Al Salam in 2014. The group’s relations with Iran has been volatile.
Kataeb Hezbollah: The group, which is fighting on behalf of the Bashar Al Assad government in Syria, traces its origins to attacks on US forces in Iraq in 2004 and adopts a tough stance against Washington, calling the United States “the enemy of humanity”.
Asaeb Ahl Al Haq: An offshoot of the Mahdi Army active in Syria. Asaeb Ahl Al Haq’s leader Qais al Khazali was a student of Mr Al Moqtada’s late father Mohammed Sadeq Al Sadr, a prominent Shiite cleric who was killed during Saddam Hussein’s rule.
Harakat Hezbollah Al Nujaba: Formed in 2013 to fight alongside Mr Al Assad’s loyalists in Syria before joining the Hashd. The group is seen as among the most ideological and sectarian-driven Hashd militias in Syria and is the major recruiter of foreign fighters to Syria.
Saraya Al Khorasani: The ICRG formed Saraya Al Khorasani in the mid-1990s and the group is seen as the most ideologically attached to Iran among Tehran’s satellites in Iraq.
(Source: The Wilson Centre, the International Centre for the Study of Radicalisation)
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Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
